18) Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of twenty separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. Additional information is as follows:

Activity

Allocation Base

Cost Allocation Rate $

Materials handling

Number of parts

0.08

Machining

Machine hours

7.20

Assembling

Number of parts

0.35

Packaging

Number of finished units

2.70

What is the cost of assembling per ceiling fan?

A) $87.50

B) $7.00

C) $7.50

D) $35.00

19) Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of twenty separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. There is no direct labor cost. Additional information is as follows:

Activity

Allocation Base

Cost Allocation Rate $

Materials handling

Number of parts

0.08

Machining

Machine hours

7.20

Assembling

Number of parts

0.35

Packaging

Number of finished units

2.70

What is the total manufacturing cost per ceiling fan?

A) $125.75

B) $121.13

C) $115.32

D) $124.30

20) Oscar Inc., a manufacturer of gift articles, uses a single plantwide rate to allocate indirect costs. The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead cost for the year is $5,000,000. And estimated machine hours are 25,000. During the year, the actual machine hours used was 30,000. Calculate the predetermined overhead allocation rate.

A) $166

B) $250

C) $200

D) $150

21) Alpha Company manufactures breadboxes and uses an activity-based costing system. The following information is provided for the month of May:

Activity

Estimated Indirect Activity Costs

Allocation Base

Estimated Quantity of Allocation Base

Materials handling

$3,500

Number of parts

5,000 parts

Assembling

$12,000

Number of parts

5,000 parts

Packaging

$5,750

Number of bread boxes

1,250 bread boxes

Each breadbox consists of four parts, and the direct materials cost per breadbox is $7.00. There is no direct labor. What is the total manufacturing cost per breadbox?

A) $17.40

B) $24.00

C) $12.40

D) $26.00

22) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per hour for the account inquiry activity?

A) $0.75

B) $30.00

C) $10.00

D) $1.50

23) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per line for the account billing activity?

A) $1.50

B) $30.00

C) $1.60

D) $1.43

24) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per account for the account verification activity?

A) $30.00

B) $0.50

C) $2.25

D) $0.75

25) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

What is the cost per letter for the correspondence activity?

A) $10.00

B) $30.50

C) $25.00

D) $0.75

26) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

How much of the account inquiry cost will be assigned to the Midwest Office?

A) $2,000

B) $6,500

C) $3,000

D) $6,000

27) Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities

Allocated Costs

Allocation Base

Account inquiry (hours)

$60,000

2,000 hours

Account billing (lines)

$30,000

20,000 lines

Account verification (accounts)

$15,000

20,000 accounts

Correspondence (letters)

$10,000

1,000 letters

The above activities are carried out at two of its regional offices.

Northeast Office

Midwest Office

Account inquiry (hours)

100 hours

200 hours

Account billing (lines)

10,000 lines

7,000 lines

Account verification (accounts)

1,000 accounts

600 accounts

Correspondence (letters)

50 letters

100 letters

How much of the correspondence cost will be assigned to the Northeast Office?